Profit, dividend repatriation hits one-year high in October

KARACHI: The repatriation of profits and dividends from foreign investors in Pakistan rose to a one-year high in October, indicating a broader normalisation of capital outflows amid the country’s improved foreign exchange reserves and the external account.

In October 2025, Pakistan recorded a profit and dividend repatriation of $385.6 million, the highest since October 2024, according to central bank data published on Wednesday.The repatriated earnings by overseas investors surged by 142.6 per cent month-on-month (MoM) in October, although they were down 6.8 per cent compared to the same month last year.

During the first four months (July-October) of the current fiscal year, multinational companies in Pakistan transferred $1.137 billion in profits and dividends to their parent businesses, marking a 39 per cent increase when compared to the same period a year earlier.

Saad Hanif, head of research at Ismail Iqbal Securities, said that the increase in foreign profit repatriation reflects both seasonal year-end dividend clearance (for June-closing companies) and a broader normalisation of foreign exchange outflows.

“The sharp MoM increase (+143 per cent) signals that FX liquidity conditions have improved sufficiently to clear accumulated dues without creating system stress,” Hanif said.Foreign investors are increasingly confident that capital mobility has stabilised after years of restrictions, he added.

Pakistan’s current account is facing pressure due to a widening trade gap caused by increased imports. However, the State Bank of Pakistan expects the current account deficit to remain manageable, projecting it will be in a range of zero to 1.0 per cent of GDP in FY26.

The bank’s reserves have surged nearly fivefold from a low of $3 billion in 2023. The SBP anticipates that its reserves will reach $15.5 billion by December and approximately $17.8 billion by June 2026.

Pakistan is set to receive the next loan tranche of $1.2 billion from the International Monetary Fund on December 9, following a staff-level agreement reached between the global lender and the country’s authorities last month.

While profits and dividends repatriation have continued to rise, reflecting increased corporate profitability of foreign companies as the economy recovers, foreign direct investment (FDI) in Pakistan remains low. FDI reached $748 million in July-October FY26, down 26 per cent from a year earlier.

Furthermore, several MNCs are exiting Pakistan due to high costs, a challenging business environment, strategic global shifts, a burdensome tax structure and political and economic instability. Among the key reasons for these exits were restrictions on profit repatriation, although these restrictions have now eased.

According to SBP data, the power sector witnessed the largest increase in repatriated earnings, bolstered by strong inflows in the financial and pharmaceutical sectors. From July to October of FY26, the power sector reported an outflow of profits and dividends totalling $347 million, which is a significant rise from $126.7 million during the same period last year. The financial sector came in second, with repatriations amounting to $226.7 million. The pharmaceutical sector followed, with outflows of $75 million in July-October FY26, compared to $4.5 million last year.